On Thursday August 6, 2020 the Province of Ontario Attorney General, Doug Downey, was part of a virtual discussion with members of the bar regarding legal policy and possible legislative changes. One of the topics was whether to make permanent the provisions of the coronavirus pandemic emergency order for witnessing of Wills and Powers of Attorney virtually, utilizing electronic means.
Similar discussions are taking place across Canada as a consequence of the coronavirus emergency and measures requiring action by the government. In the Province of British Columbia Attorney General, David Eby, introduced Bill 21 on June 22, 2020 called the Wills, Estates and Succession Amendment Act, 2020. The proposed British Columbia legislation would make permanent the provisions on virtual witnessing of wills and goes further to allow electronic wills. The British Columbia government states: “The changes will benefit British Columbians who, for example, have a disability, are quarantined, live in rural or remote communities, or would have difficulty attending a lawyer’s or notary’s office due to child care or other responsibilities.” The changes: “will enable the courts to accept wills that are created on a computer and signed electronically, and for which there is no printed copy.” The proposed British Columbia legislation includes:
“electronic form”, in relation to an electronic will, means a form that (a) is recorded or stored electronically, (b) can be read by a person, and (c) is capable of being reproduced in a visible form;
“electronic signature” means information in electronic form that a person has created or adopted in order to sign a record and that is in, attached to or associated with the record;
“electronic will” means a will that is in electronic form.
The proposed draft legislation in entirety can be read here.
This is now a rapidly changing area of the law. There will certainly be more developments across Canada that we will be following for you.
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In response to issues arising in the execution of Wills during the COVID-19 pandemic, the Ontario government introduced an Order in Council specifically dealing with the execution of Wills and Powers of Attorney. Ontario Regulation 129/20. made under the Emergency Management and Civil Protection Act provided that the requirement that a testator or witness be present in each other’s presence for the making of a Will or Power of Attorney may be satisfied by means of audio-visual communication technology, with certain restrictions. See our blog on the virtual witnessing of Wills and Powers of Attorney, here.
Under the Reopening Ontario (A Flexible Response to COVID-19) Act (“the Reopening Ontario Act”), Orders made under the Emergency Management and Civil Protection Act that have not been previously revoked are extended and continued under the Reopening Ontario Act. The extension is for a period of 30 days after the Order is continued, subject to further extension.
The new Order, Ontario Regulation 129/20 formerly made under the Emergency Management and Civil Protection Act, but now continued under the Reopening Ontario Act can be found here.
The Reopening Ontario Act received Royal assent on July 21, 2020 and came into effect on July 24, 2020.
The power to extend or amend an Order ceases on the first anniversary of the day orders are continued (ie. July 24, 2021).
This would mean that the virtual witnessing of Wills and Powers of Attorney is extended until August 23, 2020, with the government having the power to further extend the provisions.
We will keep you posted.
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Life insurance can be an important part of an estate plan, be it taken out to fund payment of anticipated tax liabilities triggered by death, to assist in supporting surviving family members, or to equalize the distribution of an estate within the context of the gift of an asset of significant value (such as a family business) to one child to the exclusion of another, who can be designated as beneficiary of the policy.
In a time when many Canadians are facing their mortality and taking the pause from normal life as an opportunity to review and update estate plans, many Canadians are turning their minds to other aspects of estate planning, including supplementing an estate plan with life insurance. A recent Financial Post article suggests that life insurance applications have doubled during the pandemic, as more Canadians take steps to plan for the unexpected during this period of uncertainty.
At the same time, premiums for new permanent life insurance policies have increased by as much as 27%. While term life insurance policies may remain a more affordable option, they too are anticipated to become more expensive, with upcoming premium increases of up to 20%. The increase in premiums has been linked to lowering interest rates and restrictions to the investment options available to insurance companies.
Other changes to life insurance during the pandemic include the exclusion of the standard medical examination required in order to obtain some types of coverage. The maximum coverage offered by many providers without a medical exam has increased to reflect limitations to the ability for applicants to safely attend an in-person examinations. For other providers and types of plans, medical examinations are simply on hold.
Lastly, insurance companies have updated intake questionnaires to include COVID-screening questions. If an applicant is experiencing potential symptoms, they may be required to wait two weeks before taking out the policy, but are not typically ineligible from coverage altogether. Some insurers, however, are no longer offering new coverage to seniors or others who are at a higher risk of complications during the period of the pandemic.
One life insurance provider has already doubled its projected COVID-19-related payouts during 2020 from the figures it had released earlier this year. While there may have been changes to certain eligibility requirements and the cost of life insurance, it remains a suitable estate planning tool for many Canadians.
Thank you for reading,
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Many parts of the world remain under some degree of lockdown due to the COVID-19 pandemic. For older adults who may have limited access to assistance or company outside of immediate family during the pandemic, and/or whose transition to long-term care may have been delayed as a result, temporary relocation to live with supportive family members may be a suitable option.
As our readers know, inheritance tax is payable in respect of the assets of estates located in a number of jurisdictions, which do not include Canada. In the United Kingdom, for example, an inheritance tax of 40% is charged on the portion of an estate exceeding a tax-free threshold of 325 thousand pounds (subject to certain exceptions).
One way that some families choose to limit inheritance tax is to gift certain assets, in some cases a family house, prior to death, such that its value will not trigger the payment of inheritance tax. In the UK, if an asset is validly gifted at least seven years before death, inheritance tax will not be payable on the asset. However, where the donor of the gift reserves the benefit of the property – for example, if he or she continues to live at real property gifted to another family member – the gift will not be valid for the purposes of inheritance tax calculations.
A recent news article highlights the risk that older individuals in the UK who move back into previously gifted property during the pandemic may lose the benefit of potential inheritance tax exclusions by falling under the “gift with reservation of benefit” exception as a result of benefitting from continued occupation of the gifted property. While this risk may not outweigh the benefits of obtaining family support, it is a factor that a family may wish to consider as part of a decision to alter living arrangements.
Approximately 600 gifts have failed in the past several years, triggering up to 300 million pounds in inheritance tax in the UK. It is certainly possible that these figures will continue to increase as a result of shared family accommodations during the pandemic.
Thank you for reading and stay safe,
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Estate litigation can be complex at the best of times. An Order Giving Directions, obtained at the early stages of the litigation, can set out not only the substantive issues to be tried, but may also provide for a number of procedural issues that need to be addressed in order to assist in the advancement of the litigation and also the administration of the estate.
These matters can be made much more complex during the current pandemic.
Such complications are illustrated in the recent decision of Lima v. Ventura (Estate of), 2020 ONSC 3278 (CanLII). There, an Order was made on February 6, 2020 which provided for a number of procedural matters, including the sale of the deceased’s home. The deceased’s home was occupied by one of her children and his family. The Order provided that that son had the option of purchasing the property at a price to be agreed to by the parties, with the sale to be completed by April 14, 2020.
After the February 6, 2020 Order was made, things hit the fan. The son, who was out of the country at the time of the Order, returned on February 26, and was forced to self-quarantine for 14 days. He tried to get a real estate person to do a Comparative Market Evaluation of the property, but the person would not make a site visit due to COVID-19. The son was not able to get other information needed to be disclosed under the Order due to bank and municipality closings.
The son moved for an Order extending the time to exercise the option to purchase. The motion was denied.
The court recited cases addressing the need to obey a court Order. Court Orders are not “suggestions” or “frameworks” but are mandatory in nature and must be obeyed. This continues to be true during the COVID-19 emergency. As stated by Chief Justice Morawetz in the Consolidated Notice to the Profession and others, effective May 19, 2020, “During this temporary suspension of in-court operations, counsel and parties are expected to comply with existing orders and rules of procedure, as well as procedures in this and other Regional Notices, to bring cases closer to resolution, to the extent that they can safely do so through virtual means. This guidance also applies to self-represented parties.”
In refusing the request to vary the prior Order, the court listed some of the factors to be considered. These include:
- a) The steps not taken were necessary to carry out the terms of any order, and no other alternative to taking those steps would have served that purpose;
- b) The steps were not taken because of the moving party’s inability to access business, professional or institutional offices physically or electronically because of COVID-19 protocols;
- c) An extension of time would not be contrary to any law, or the rights of other person under an order of any court;
- d) A reasonable explanation is provided for not taking the required steps, or why it was difficult or impossible to comply with the order for COVID-19 related reasons;
- e) The moving party has made best efforts to otherwise comply with the order, and all other terms of the order that were not impeded by the COVID-19 protocols have been met; and
- f) The moving party has acted in good faith.
The onus of providing necessary and persuasive evidence with respect to these factors is on the party seeking to have the order varied. In the case before the court, the son did not provide sufficient persuasive evidence to justify his inability to comply with the order. His request for an extension of the time within which to exercise his option to purchase was denied. Carriage of the sale was granted to the other estate trustees.
The decision also addresses the issue of occupation rent and the circumstances where it might be ordered to be payable. I will leave that for another day.
Have a great weekend. Stay safe and healthy.
Courts are reopening across the province. However, going to court will not be like it used to be.
In order to be allowed to enter the courthouse, lawyers and the public will need to complete a COVID-19 courthouse screening questionnaire.
The questionnaire is online and can be completed in advance. Choose the courthouse that you want to visit, and answer five simple questions about your health status. Get the answers right, and you’ll get a checkmark on your screen that you can show to courthouse security. If you didn’t take the test on your smartphone, you can print the results and take that to the courthouse. Get the answers wrong and you are told that you cannot enter the courthouse. The page tells you who you should contact.
The test and results are only good for one day. You have to take the test on the morning of your planned court attendance.
As there will be inevitable delays when entering a courthouse, extra time will be required.
Other changes include enhanced cleaning, hand sanitizer stations, barriers and physical distancing measures. In courtrooms, barriers are being installed in the courtroom where the judge sits, at the witness stand, court personnel work stations and counsel tables. Disinfectant wipes are available at counsel tables. Documents handed up to the judge are to be placed in a bin or on a trolley. Access to elevators is limited. Court counters are open for limited hours.
Read more about court reopening protocols here.
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On March 30, 2020, Noah Weisberg blogged about the estate trustee’s duty to invest during COVID-19, a time when market fluctuations have become the norm. Today, I consider how pandemic-induced changes in the housing market may impact an estate trustee’s management of real property held by an estate.
Real properties – including primary residences, cottages, and vacation properties – are often some of the largest assets an estate trustee will deal with during the course of their administration of an estate. Unless otherwise stated in the deceased’s will, the estate trustee has a fiduciary duty to sell the estate’s real property for its fair market value and is expected to do so in a timely manner.
However, the exact timing for the market and sale of real property can depend on many factors. It is common for a will to grant an estate trustee the discretion to choose whether to sell or retain assets. As it pertains to real property, this power allows the estate trustee to hold onto a property until such time as they can achieve the best possible sale price on behalf of the beneficiaries. At the same time, the estate trustee needs to be mindful of the costs incurred by the estate in having to maintain the property. Beneficiaries of the estate may also put pressure on an estate trustee to sell the property and convert it to money sooner rather than later.
Like most industries, the real estate market has been impacted by COVID-19. An estate trustee should be attentive to whether recent changes in the housing market make it an ideal or inopportune time to market a particular property for sale, while also bearing in mind the factors described above.
If an estate trustee decides to list a property for sale in today’s uncertain housing market, there are a few things they can do to help protect themselves against future claims from beneficiaries. First, the estate trustee should have the property appraised for its fair market value by a professional appraiser who is an independent third party. For added protection, the estate trustee may want to have the beneficiaries sign off on the property’s price. The estate trustee should also make an effort to keep the beneficiaries apprised of each step of the sale process. Lastly, the estate trustee should take care to keep detailed records of all advice received and steps taken in the event that they need to justify their actions at a later date.
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The COVID-19 pandemic has forced the legal profession to alter the ways in which we practice. The need to keep litigation moving forward has brought to the forefront alternative processes and the importance of technology. Files are continuing to move forward during the pandemic via virtual proceedings, such as virtual courtrooms and virtual mediations. While some are embracing these platforms, others are more wary. In Arctoni v. Smith, 2020 ONSC 2782, Justice Myers considered whether an examination for discovery should proceed by videoconference, or if the plaintiffs were allowed to wait until the physical distancing restrictions are lifted and conduct the examination in-person.
The plaintiffs objected to a videoconference examination because they maintained that:
- They needed to be with their counsel to assist with documents and facts during the examination;
- It is more difficult to assess a witness’s demeanour remotely;
- The lack of physical presence in a neutral setting deprives the occasion of solemnity and a morally persuasive environment; and
- They did not trust the defendants not to engage in sleight of hand to abuse the process.
Justice Myers noted that the simplest answer to this issue is that “It’s 2020”. He went on to say that “we now have the technological ability to communicate remotely effectively. Using these technological methods is more efficient and less costly than personal attendance and we should not be going back.”
While the court endorsed the use of technology, it acknowledged that legitimate concerns exist. One of which is that technology can be abused. It was noted, however, that the possibility of abuse may still exist even if parties are in the same room. While it is important to remain vigilant against the risk of fraud and abuse, a vague risk of abuse is not a good basis to decline the use of technology.
Furthermore, the suggestion that the use of videoconferencing creates “due process” concerns was rejected as the court noted that all parties have the same opportunity to participate and to be heard. All parties also have the same ability to put all of the relevant evidence before the court and to challenge the evidence adduced by the other side.
With regards to the plaintiffs concern that they needed to be with counsel to assist with the documents and facts, Justice Myers stated that there are other ways in which counsel can convey information to their colleagues during an examination. For instance, Zoom offers “breakout rooms” in which counsel can privately meet with their colleagues and clients.
Case law depicts that there are many fears associated with assessing the credibility of a witness via video technology but these fears, by those who have never actually used the technology stated Justice Myers, may not be as significant as they seem. While solemnity and personal chemistry may be lost in remote proceedings, it is not yet known whether, over time, solutions to these shortcomings will be developed as familiarity with these processes grows.
Justice Myers emphasized that, in 2020, the use of readily available technology is “part of the basic skillset required of civil litigators and courts.” He went on to say that those who are uncomfortable with technology should obtain necessary training and education.
The court concluded that proceeding remotely does have its shortcomings; however, in this case, the benefits of doing so outweighed the risks. The plaintiffs main concerns could be resolved by creative alternatives or by increased familiarity with technology. By proceeding remotely, the litigation, which had been going on for years, would not have to be delayed. Consequently, Justice Myers ordered that, unless the plaintiffs chose to waive their opportunity to conduct the examination for discovery, the examination should proceed by videoconference.
Thank you for reading!
Ian Hull and Celine Dookie
This week on Hull on Estates, Noah Weisberg and Nick Esterbauer discuss continued accounting obligations during the COVID-19 pandemic and procedural considerations relating to fresh and pre-existing applications to pass accounts.
Should you have any questions, please email us at email@example.com or leave a comment on our blog.
After consulting with the Chief Medical Officer of Health, the Ontario government has extended all emergency orders that are currently in effect until June 19, 2020.
For a list of the emergency orders under s. 7.0.2(4) of the Emergency Management and Civil Protection Act (“EMCPA”) that have been extended, see here.
Ontario has also announced that it is extending the suspension of limitation periods and time periods in proceedings pursuant to O. Reg 73/20 until September 11, 2020, which is the maximum renewal period allowable under the EMCPA. O. Reg. 259/20 implements the extension and can be found here.
Furthermore, to address concerns raised by the bar, the Lieutenant Governor in Council has amended O. Reg. 73/20 to provide for further clarity. O. Reg. 258/20 amends the language of O. Reg. 73/20 such that the suspension of limitation periods is no longer tied to the “duration of the state of emergency,” allowing the duration of the order to be based on all relevant factors, and not just the state of emergency. As reported by the Ontario Bar Association, “decoupling” the duration of the suspension from the state of emergency was implemented to address the bar’s request for reasonable predictability and notice.
With regard to the suspension of deadlines and procedural steps set out in any statute, regulation, rule, by-law, or order of the Ontario government, O. Reg. 73/20 provides that the suspension is subject to the discretion of “the court, tribunal or other decision-maker responsible for the proceeding…” O. Reg. 258/20 has clarified that this discretion may be exercised by:
- the person or persons who have jurisdiction to make orders in the proceeding;
- the Chief Justice of Ontario, in respect of proceedings before the Ontario Court of Appeal;
- the Chief Justice of the Superior Court of Justice, in respect of matters before the Superior Court of Justice;
- the Chief Justice of the Ontario Court of Justice, in respect of matters before the Ontario Court of Justice; and
- the chair of a tribunal, in respect of proceedings before the tribunal.
Finally, O. Reg 258/20 provides for the resumption of enforcement under Part V of the Family Responsibility and Support Arrears Enforcement Act.
With court closures, limited filings, suspensions of limitation periods, and a likely period of “post-pandemic austerity” on the horizon, Ontario’s justice system is changing, and will need to continue to change to effectively meet the needs of the public. Limitation periods may be on pause, but peoples’ lives continue. For many, this means having some form of interaction with the justice system. Ontario’s Chief Justice, the Honourable Justice George Strathy, has provided his thoughts on what changes may be needed, and questions whether oral advocacy is necessary in every case. For more on Justice Strathy’s comments, see here.
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